pooled trust

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A pooled trust can refer to any type of trust that is combined with other assets and managed by the same entity. While potentially referring to investment strategies, pooled trust typically refers to trusts used to benefit those with low income or charities.

For those receiving Medicare or Supplemental Security Income (SSI), a pooled trust allows the individual to have assets that do not end their eligibility for the programs. As long as they follow certain rules, the assets will not be counted towards income limits. Often, individuals with special needs will create a pooled trust with inherited assets to prevent triggering any limits. The assets are managed by non-profits who pool together multiple individual's assets under the same management which reduces the costs associated with trusts. The individual may receive periodic distributions from the trust, and when they pass away, any Medicare benefits received must be repaid from the remaining assets before beneficiaries can receive anything. Also, third-parties can contribute normally to separate accounts to benefit the owner of the trust with potential tax deductions, and these assets are not used to repay Medicare benefits. 

A pooled trust may also refer to trust simply pooled together by a non-profit organization with the goal of increasing income for the organization. Often, individuals will have their trust managed by the organization to receive benefits for life with the assets going to the organization after they pass away. This structure can have tax benefits for the individual, reduce management fees of assets, and increase the benefits to the non-profit organization than a normal trust may. 

[Last updated in March of 2022 by the Wex Definitions Team